Icahn has some support from a major hedge fund for getting Yahoo to come back to the Microsoft offer table.

NEW YORK (Reuters)
- Paulson & Co., the $30 billion hedge fund that recently built up
a stake of 50 million shares of Yahoo Inc (YHOO.O: Quote, Profile, Research), said it intends to support a dissident board slate put forth on Thursday by investor Carl Icahn.

But Paulson, which is managed by merger arbitrage specialist John
Paulson, said it hopes a proxy fight won't be necessary to get Yahoo
and Microsoft Corp (MSFT.O: Quote, Profile, Research) back to the bargaining table.

"We were disappointed that Yahoo failed to reach an agreement with
Microsoft," said Paulson in a statement. "We continue to believe that a
combination between Yahoo and Microsoft would form a dynamic company
and a stronger competitor to Google (GOOG.O: Quote, Profile, Research).

"We intend to support the Icahn slate but sincerely hope that Yahoo
will negotiate an agreement with Microsoft, thereby making a proxy
fight unnecessary."

Reuters earlier reported, citing sources, that Paulson had built up
the Yahoo stake of about 3.4 percent of the company. The hedge fund has
since disclosed the holdings in a regulatory filing.